The Housing Act 2004 (“the Act”) sets out the requirements. The landlord must comply with the initial requirements of an authorised scheme in relation to the deposit within 14 days of it being received; the landlord must also give the tenant appropriate information about the scheme within the same period.
But what would happen if, for instance, a landlord pays the deposit into an authorised tenancy deposit scheme a day late, or a landlord who has failed to put the deposit into an authorised tenancy deposit scheme nevertheless confirms that he intends to return the full deposit at the end of the tenancy? The narrow drafting of the Act led to strict implementation of the provisions relating to compensation payments for tenants. Consequently, in the scenarios given, the landlord would have been required not only to repay the deposit but also “a sum of money equal to three times the amount of the deposit…”
The recent Court of Appeal Judgments in these cases offer clarity and some reassurance to landlords. The Court has held that although the Act imposed a 14-day time limit for compliance with the initial requirements of a tenancy deposit scheme, the focus is no longer on whether the requirements had been complied with within the 14-day period but whether there had been compliance at all during the term of the tenancy (though landlords who delay are at risk of having to meet tenants’ legal costs). In any event, once the tenancy has come to an end, the tenant will be prevented from bringing a claim for three times the value of the deposit. However, if the deposit is unlawfully withheld by the landlord after the tenancy comes to an end then it will still be open to the tenant to issue a claim in the County Court for its return.
In some respects this is an unexpected outcome as one of the reasons behind the introduction of the Housing Act 2004 was to avoid tenants having to issue court proceedings against landlords for the return of their unlawfully retained deposit. However, a common sense balance appears to have been achieved because the law now successfully protects tenants’ deposits without unnecessarily punishing landlords.
Landlords must not be complacent about the changes as they stand the considerable risk of being caught out. Landlords would be best advised to act promptly to avoid the inconvenience and financial consequences of being drawn into a legal dispute at a later stage.
James Teagle is a dispute resolution solicitor and a member of the Property Litigation Association.
To speak with James call 01904 683095 or send him an
email.